COVID-19 Impact Analysis Series Article Six: Which cuisines are capturing higher order values?

Author: Shubham Goyal (April 24, 2020)

THIS COVID-19 Impact Analysis Series designed by Punchh’s data team aims at sharing the real-time insight we have discovered when we study our consumer behavior data set.

In this sixth article of the series, we highlighted how some cuisine types are able to offset the steep drop in transactions by capturing higher value in each order (in other words, higher Average Order Value a.k.a AOV)

Due to the stay home directives, people commuting daily to the work has declined significantly. As a result, transaction volume and sales have declined by up to 50% within 6 weeks, however, AOV has increased a little over 10% last week compared to the first week of the pandemic, albeit there was a decline by ~5% in the first two weeks of the pandemic.

Weekly % change in transactions, sales & AOV from the first week of the pandemic across industry

So, what is the AOV trend over weeks for different cuisine types?

To answer this we have compared the AOV trend across the top 5 cuisines based on the total transactions in each cuisine. Together they have contributed >80% to total transactions during the last two weeks in our data set.

The chart indicates that the Pizza category has gained the most followed by beverages and Mexican. For both the categories, most of the brands are seeing AOV growth of 4–5% weekly after the first half of March.

Weekly % change in AOV from the first week of the pandemic by cuisine type

Ok, so why are Pizza and Beverage outperforming other cuisine types?

To understand this we have examined the distribution of transactions by AOV. One common trend that comes out from the chart below is that the % of transactions of <$10 has decreased across cuisine types. On the other hand, Pizza and Beverage were able to capture a higher proportion of transactions coming from higher AOV transactions. Pizza has gained 8% in the proportion of transactions above $30 in a matter of 4 weeks.

Distribution of transactions by AOV by cuisine type

Wait, how does it reflect in trends of transactions and sales?

So coming back to the sales and transactions trend, we have plotted the chart for all the pizza brands we have in our data set.

Weekly % change in transactions, sales from the first week of the pandemic for pizza cuisine

Due to a bigger shift in their proportion of business coming from higher AOV ( >$30) even the sales started showing an upward trend.

KEY TAKEAWAYS

• Considering the shift in consumption behavior of certain cuisine types, brands should focus on creating more bundled offers. This can help offset drop in visits and the resultant drop in sales to a certain extent.
• For brands with mixed menu items (from several cuisines), the focus should be on creating bundled offers with items from one of the 3 cuisine types — Pizza, Mexican and Beverage

ABOUT THE DATA

The underlying data for this analysis is from 20K+ restaurant stores across the country covering 100+ brands for the period of Mar 09 — Apr 19.